FCNR(B) inflows could exceed $80 billion despite early RBI swap window closure: Report

New Delhi, Aug 17 (SocialNews.XYZ) Foreign currency inflows through FCNR(B) deposits could exceed $80 billion despite the Reserve Bank of India advancing the closure of its swap window after stronger-than-expected flows, according to a report.

According to a report by Bank of America (BofA) Securities, the earlier projection of FCNR(B) inflows of up to 70 billion has now been revised to more than $80 billion citing robust inflows since the facility was introduced.

"We revise this up to the $80 billion+ given stronger flows," the brokerage added.

The brokerage said the earlier closure of the facility would mean that inflows would remain below the level that could have been achieved had the window continued until September.

However, it has expected that revised estimate to have some clear upside from its earlier forecast.

The RBI has advanced the deadline for banks to use the zero-cost hedging facility for FCNR(B) deposits to August 31 from September 30.

In addition, banks had received $52.3 billion through FCNR(B) deposits between June 8 and August 13.

Besides FCNR(B) deposits, the RBI received $1.7 billion through swap facilities for external commercial borrowings and $2.8 billion through overseas foreign currency borrowings by authorised lenders between June 8 and August 13.

BofA further noted that the foreign currency inflows would provide support to India's balance of payments even as the country's current account moved into a deficit of $3.1 billion or 0.3 per cent of GDP in the April-June quarter. The brokerage attributed the current account deficit to a wider merchandise trade deficit which was partly offset by stronger services exports and remittances.

Moreover, it expects the current account deficit to remain moderate in the second quarter and said that the deficit could be lower if goods exports improve or remittance inflows remain strong.

Source: IANS